NICE Reports 16% Growth in Total Revenue and 28% Cloud Revenue Growth for the Second Quarter of 2022

Significant Expansion in Both Gross and Operating Margins

Company Raises Both Revenue and EPS Guidance for Full Year 2022

HOBOKEN, N.J.–(BUSINESS WIRE)–NICE (NASDAQ: NICE) today announced results for the second quarter ended June 30, 2022.

Second Quarter 2022 Financial Highlights

GAAP	Non-GAAP
Total revenue of $530.6 million, growth of 16.1% year-over-year	Total revenue of $530.6 million, growth of 15.6% year-over-year
Cloud revenue of $311.4 million, growth of 27.9% year-over-year	Cloud revenue of $311.4 million, growth of 26.8% year-over-year
Cloud gross margin of 63.6% compared to 59.3% last year	Cloud gross margin of 70.1% compared to 67.7% last year
Total gross margin of 68.9% compared to 67.1% last year	Total gross margin of 73.3% compared to 72.2% last year
Operating income of $84.7 million compared to $64.8 million last year, growth of 30.7% year-over-year	Operating income of $154.0 million compared to $129.6 million last year, growth of 18.8% year-over-year
Operating margin of 16.0% compared to 14.2% last year	Operating margin of 29.0%, compared to 28.2% last year
Diluted EPS of $0.99 versus $0.68 last year, growth of 45.6%	Diluted EPS of $1.86 versus $1.57 last year, growth of 18.5%

“It was an outstanding quarter at NICE, as we continued to drive mid-teens double-digit growth in both the top and bottom lines,” said Barak Eilam, CEO of NICE. “Our strong performance with 83% recurring revenue driven by our growing cloud business at scale and industry-leading profitability clearly distinguishes NICE among our competitors in a rapidly evolving industry. Our rock-solid balance sheet gives us the fuel to seize additional growth opportunities that will further extend our leadership.”

Mr. Eilam continued, “For many years now, we have successfully employed a bulls-eye strategy around cloud, platform and next-gen digital. The harmonization of these three elements is what the market is now experiencing more than ever, and we are at the center of it. CXone embodies the industry’s broadest and deepest suite of fully integrated solutions on a native cloud platform, and enterprises of all sizes, especially at the high end of the market, are coming to NICE to replace their on-premise, point solutions and obsolete digital products with CXone.”

GAAP Financial Highlights for the Second Quarter Ended June 30:

Revenues: Second quarter 2022 total revenues increased 16.1% to $530.6 million compared to $456.8 million for the second quarter of 2021.

Gross Profit: Second quarter 2022 gross profit was $365.7 million compared to $306.3 million for the second quarter of 2021. Second quarter 2022 gross margin was 68.9% compared to 67.1% for the second quarter of 2021.

Operating Income: Second quarter 2022 operating income was $84.7 million compared to $64.8 million for the second quarter of 2021. Second quarter 2022 operating margin was 16.0% compared to 14.2% for the second quarter of 2021.

Net Income: Second quarter 2022 net income was $65.6 million compared to $45.2 million for the second quarter of 2021. Second quarter 2022 net income margin was 12.4% compared to 9.9% for the second quarter of 2021.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the second quarter of 2022 increased 45.6% to $0.99 compared to $0.68 in the second quarter of 2021.

Operating Cash Flow and Cash Balance: Second quarter 2022 operating cash flow was $16.0 million.

In the second quarter, $34.1 million was used for share repurchases. As of June 30, 2022, total cash and cash equivalents, and short-term investments were $1,434.6 million. Our debt, net of a hedge instrument, was $540.1 million, resulting in net cash and investments of $894.5 million.

Non-GAAP Financial Highlights for the Second Quarter Ended June 30:

Revenues: Second quarter 2022 total revenues increased 15.6% to $530.6 million compared to $458.9 million for the second quarter of 2021.

Gross Profit: Second quarter 2022 Non-GAAP gross profit increased to $388.9 million compared to $331.5 million for the second quarter of 2021. Second quarter 2022 Non-GAAP gross margin was 73.3% compared to 72.2% for the second quarter of 2021.

Operating Income: Second quarter 2022 Non-GAAP operating income increased to $154.0 million compared to $129.6 million for the second quarter of 2021. Second quarter 2022 Non-GAAP operating margin was 29.0% compared to 28.2% for the second quarter of 2021.

Net Income: Second quarter 2022 Non-GAAP net income increased to $123.2 million compared to $104.3 million for the second quarter of 2021. Second quarter 2022 Non-GAAP net income margin totaled 23.2% compared to 22.7% for the second quarter of 2021.

Fully Diluted Earnings Per Share: Second quarter 2022 Non-GAAP fully diluted earnings per share increased 18.5% to $1.86 compared to $1.57 for the second quarter of 2021.

Third Quarter and Full Year 2022 Guidance:

Third Quarter 2022:

Third quarter 2022 Non-GAAP total revenues are expected to be in a range of $543 million to $553 million.

Third quarter 2022 Non-GAAP fully diluted earnings per share are expected to be in a range of $1.82 to $1.92.

Raising Full Year 2022 Guidance:

The Company increased full year 2022 Non-GAAP total revenues, which are expected to be in a range of $2,168 million to $2,188 million (compared to previous guidance range of $2,160 million to $2,180 million).

The Company increased full year 2022 Non-GAAP fully diluted earnings per share, which are expected to be in a range of $7.33 to $7.53 (compared to previous guidance range of $7.25 to $7.45).

Quarterly Results Conference Call

NICE management will host its earnings conference call today August 18, 2022, at 8:30 AM ET, 13:30 GMT, 15:30 Israel, to discuss the results and the company’s outlook. To participate in the call, please dial into the following numbers: United States 1-877-407-4018 or +1-201-689-8471, United Kingdom 0-800-756-3429, Israel 1-809-406-247.

The call will be webcast live on the Company’s website at https://www.nice.com/investor-relations/upcoming-event.

Explanation of Non-GAAP measures

Non-GAAP financial measures are included in this press release. Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude share-based compensation, amortization of acquired intangible assets, acquisition related expenses, amortization of discount on debt and loss from extinguishment of debt and the tax effect of the Non-GAAP adjustments. FASB issued an accounting update, ASU2021-08, Business Combinations, in the fourth quarter of 2021. The amendments in ASU 2021-08 require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. Before this guidance and through December 31, 2020, business combination accounting rules required recognizing a legal performance obligation related to a revenue arrangement of an acquired entity as a liability. The amount assigned to such liability was based on its fair value at the date of acquisition. Effective January 1, 2021, the Company early adopted the new guidance retroactively to the start of the year. The Company has applied the new guidance retrospectively to all business combinations for which the acquisition date occurred on or after January 1, 2021, and therefore comparative financials for periods during 2021 have been adjusted accordingly to recognize the full amount of revenue associated with acquisitions.

The Company believes that these Non-GAAP financial measures, used in conjunction with the corresponding GAAP measures, provide investors with useful supplemental information about the financial performance of our business. We believe Non-GAAP financial measures are useful to investors as a measure of the ongoing performance of our business. Our management regularly uses our supplemental Non-GAAP financial measures internally to understand, manage and evaluate our business and to make financial, strategic and operating decisions. These Non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Our Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. These Non-GAAP financial measures may differ materially from the Non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and Non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income. The Company provides guidance only on a Non-GAAP basis. A reconciliation of guidance from a GAAP to Non-GAAP basis is not available due to the unpredictability and uncertainty associated with future events that would be reported in GAAP results and would require adjustments between GAAP and Non-GAAP financial measures, including the impact of future possible business acquisitions. Accordingly, a reconciliation of the guidance based on Non-GAAP financial measures to corresponding GAAP financial measures for future periods is not available without unreasonable effort.

About NICE

NICE (Nasdaq: NICE) is the worldwide leading provider of both cloud and on-premises enterprise software solutions that empower organizations to make smarter decisions based on advanced analytics of structured and unstructured data. NICE helps organizations of all sizes deliver better customer service, ensure compliance, combat fraud and safeguard citizens. Over 25,000 organizations in more than 150 countries, including over 85 of the Fortune 100 companies, are using NICE solutions. www.nice.com.

Trademark Note: NICE and the NICE logo are trademarks or registered trademarks of NICE. All other marks are trademarks of their respective owners. For a full list of NICE’ marks, please see: http://www.nice.com/nice-trademarks.

Forward-Looking Statements

This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements may be identified by words such as “believe,” “expect,” “seek,” “may,” “will,” “intend,” “should,” “project,” “anticipate,” “plan,” and similar expressions. Forward-looking statements are based on the current beliefs, expectations and assumptions of the Company’s management regarding the future of the Company’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Examples of forward-looking statements include guidance regarding the Company’s revenue and earnings and the growth of our cloud, analytics and artificial intelligence business.

Forward looking statements are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. The Company cautions that these statements are not guarantees of future performance, and investors should not place undue reliance on them. There are or will be important known and unknown factors and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These factors, include, but are not limited to, risks associated with changes in economic and business conditions, competition, successful execution of the Company’s growth strategy, success and growth of the Company’s cloud Software-as-a-Service business, difficulties in making additional acquisitions or effectively integrating acquired operations, products, technologies and personnel, the Company’s dependency on third-party cloud computing platform providers, hosting facilities and service partners, rapidly changing technology, cyber security attacks or other security breaches against the Company, privacy concerns and legislation impacting the Company’s business, changes in currency exchange rates and interest rates, the effects of additional tax liabilities resulting from our global operations, uncertainty related to COVID-19 and various other factors and uncertainties discussed in our filings with the U.S. Securities and Exchange Commission (the “SEC”).

You are encouraged to carefully review the section entitled “Risk Factors” in our latest Annual Report on Form 20-F and our other filings with the SEC for additional information regarding these and other factors and uncertainties that could affect our future performance. The forward-looking statements contained in this press release speak only as of the date hereof, and the Company undertakes no obligation to update or revise them, whether as a result of new information, future developments or otherwise, except as required by law.

###

NICE LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
			June 30,		December 31,
			2022		2021
			Unaudited		Audited
	ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$ 382,219		$ 378,656
	Short-term investments		1,052,391		1,046,095
	Trade receivables		459,743		395,583
	Debt hedge option		122,805		292,940
	Prepaid expenses and other current assets		206,291		184,604
	Total current assets		2,223,449		2,297,878
LONG-TERM ASSETS:
	Property and equipment, net		153,894		145,654
	Deferred tax assets		73,590		55,246
	Other intangible assets, net		238,912		295,378
	Operating lease right-of-use assets		108,714		85,055
	Goodwill		1,589,729		1,606,756
	Prepaid expenses and other long-term assets		234,475		224,445
	Total long-term assets		2,399,314		2,412,534
TOTAL ASSETS			$ 4,622,763		$ 4,710,412
	LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Trade payables		$ 60,436		$ 36,121
	Deferred revenues and advances from customers		371,303		330,459
	Current maturities of operating leases		15,866		19,514
	Debt		208,355		395,946
	Accrued expenses and other liabilities		458,810		487,547
	Total current liabilities		1,114,770		1,269,587
LONG-TERM LIABILITIES:
	Deferred revenues and advances from customers		55,874		66,606
	Operating leases		104,368		81,185
	Deferred tax liabilities		5,544		7,429
	Debt		454,528		429,267
	Other long-term liabilities		17,161		18,379
	Total long-term liabilities		637,475		602,866
SHAREHOLDERS’ EQUITY
	Nice Ltd’s equity		2,857,895		2,825,085
	Non-controlling interests		12,623		12,874
	Total shareholders’ equity		2,870,518		2,837,959
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$ 4,622,763		$ 4,710,412

NICE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except per share amounts)
		Quarter ended				Year to date
		June 30,				June 30,
		2022		2021		2022		2021
		Unaudited		Unaudited		Unaudited		Unaudited
Revenue:
	Cloud	$ 311,394		$ 243,520		$ 605,986		$ 471,601
	Services	166,733		167,133		323,707		328,924
	Product	52,454		46,174		128,317		111,323
Total revenue		530,581		456,827		1,058,010		911,848
Cost of revenue:
	Cloud	113,441		99,172		226,790		192,754
	Services	44,994		46,882		91,902		95,816
	Product	6,489		4,453		13,234		9,799
Total cost of revenue		164,924		150,507		331,926		298,369
Gross profit		365,657		306,320		726,084		613,479
Operating expenses:
	Research and development, net	73,482		62,218		150,060		121,373
	Selling and marketing	150,410		126,195		303,028		254,754
	General and administrative	57,075		53,133		115,942		106,105
Total operating expenses		280,967		241,546		569,030		482,232
Operating income		84,690		64,774		157,054		131,247
Financial and other expense/(income), net		50		9,062		(436)		12,456
Income before tax		84,640		55,712		157,490		118,791
Taxes on income		19,068		10,515		33,977		21,383
Net income		$ 65,572		$ 45,197		$ 123,513		$ 97,408
Earnings per share:
	Basic	$ 1.03		$ 0.72		$ 1.94		$ 1.54
	Diluted	$ 0.99		$ 0.68		$ 1.86		$ 1.46
Weighted average shares outstanding:
	Basic	63,806		63,108		63,775		63,096
	Diluted	66,274		66,512		66,563		66,618

NICE LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
			Quarter ended				Year to date
			June 30,				June 30,
			2022		2021		2022		2021
			Unaudited		Unaudited		Unaudited		Unaudited
Operating Activities
Net income			$ 65,572		$ 45,197		$ 123,513		$ 97,408
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization		42,202		45,911		86,483		90,835
	Stock based compensation		43,109		30,979		91,293		62,434
	Amortization of premium and discount and accrued interest on marketable securities		1,254		2,066		5,072		5,997
	Deferred taxes, net		(10,248)		(16,207)		(12,044)		(17,065)
	Changes in operating assets and liabilities:
		Trade Receivables	(49,596)		(2,783)		(70,855)		(22,467)
		Prepaid expenses and other assets	(11,479)		(14,103)		(40,410)		(24,963)
		Trade payables	15,354		(4,912)		24,432		4,792
		Accrued expenses and other current liabilities	(63,560)		(11,064)		(34,331)		(12,429)
		Operating lease right-of-use assets	3,941		4,442		7,883		8,923
		Deferred revenue	(15,718)		(4,638)		36,631		47,265
		Operating lease liabilities	(6,997)		(4,778)		(11,994)		(10,475)
	Amortization of discount on debt		1,151		3,513		2,288		7,612
	Loss from extinguishment of debt		113		7,298		1,205		7,298
	Other		933		519		(424)		515
		Net cash provided by operating activities	16,031		81,440		208,742		245,680
Investing Activities
	Purchase of property and equipment		(5,301)		(10,631)		(14,885)		(12,960)
	Purchase of Investments		(123,536)		(70,442)		(221,802)		(223,748)
	Proceeds from Investments		79,924		112,527		181,590		167,104
	Capitalization of software development costs		(13,073)		(11,159)		(23,744)		(21,275)
	Other		276		–		276		444
	Payments for business and asset acquisitions, net of cash acquired		–		(129,306)		–		(129,306)
		Net cash used in investing activities	(61,710)		(109,011)		(78,565)		(219,741)
Financing Activities
	Proceeds from issuance of shares upon exercise of share options		198		2,083		273		2,375
	Purchase of treasury shares		(34,070)		(340)		(97,912)		(44,562)
	Dividends paid to noncontrolling interest		(376)		(801)		(376)		(801)
	Repayment of debt		(2,017)		(82,814)		(20,110)		(82,814)
		Net cash provided by/(used in) financing activities	(36,265)		(81,872)		(118,125)		(125,802)
Effect of exchange rates on cash and cash equivalents			(5,702)		1,767		(6,639)		1,048
Net change in cash, cash equivalents and restricted cash			(87,646)		(107,676)		5,413		(98,815)
Cash, cash equivalents and restricted cash, beginning of period			$ 471,715		$ 451,128		$ 378,656		$ 442,267
Cash, cash equivalents and restricted cash, end of period			$ 384,069		$ 343,452		$ 384,069		$ 343,452

NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars in thousands (except per share amounts)
		Quarter ended				Year to date
		June 30,				June 30,
		2022		2021		2022		2021
GAAP revenues		$ 530,581		$ 456,827		$ 1,058,010		$ 911,848
Valuation adjustment on acquired deferred cloud revenue		–		1,978		–		3,800
Valuation adjustment on acquired deferred services revenue		–		60		–		166
Non-GAAP revenues		$ 530,581		$ 458,865		$ 1,058,010		$ 915,814
GAAP cost of revenue		$ 164,924		$ 150,507		$ 331,926		$ 298,369
Amortization of acquired intangible assets on cost of cloud		(18,623)		(18,211)		(37,287)		(35,726)
Amortization of acquired intangible assets on cost of services		–		(1,226)		(377)		(2,451)
Amortization of acquired intangible assets on cost of product		(258)		(287)		(534)		(570)
Valuation adjustment on acquired deferred cost of cloud		13		26		28		51
Cost of cloud revenue adjustment (1)		(1,741)		(1,676)		(4,070)		(3,170)
Cost of services revenue adjustment (1)		(2,519)		(1,646)		(5,486)		(4,081)
Cost of product revenue adjustment (1)		(134)		(126)		(266)		(251)
Non-GAAP cost of revenue		$ 141,662		$ 127,361		$ 283,934		$ 252,171
GAAP gross profit		$ 365,657		$ 306,320		$ 726,084		$ 613,479
Gross profit adjustments		23,262		25,184		47,992		50,164
Non-GAAP gross profit		$ 388,919		$ 331,504		$ 774,076		$ 663,643
GAAP operating expenses		$ 280,967		$ 241,546		$ 569,030		$ 482,232
Research and development (1)		(7,886)		(4,111)		(16,401)		(8,168)
Sales and marketing (1)		(13,129)		(6,911)		(29,398)		(17,819)
General and administrative (1)		(18,086)		(18,688)		(36,486)		(31,375)
Amortization of acquired intangible assets		(6,963)		(9,952)		(15,774)		(19,660)
Valuation adjustment on acquired deferred commission		52		55		105		108
Non-GAAP operating expenses		$ 234,955		$ 201,939		$ 471,076		$ 405,318
GAAP financial and other expense, net		$ 50		$ 9,062		$ (436)		$ 12,456
Amortization of discount on debt and loss from extinguishment of debt		(1,264)		(10,813)		(3,493)		(14,937)
Non-GAAP financial and other income, net		$ (1,214)		$ (1,751)		$ (3,929)		$ (2,481)
GAAP taxes on income		$ 19,068		$ 10,515		$ 33,977		$ 21,383
Tax adjustments re non-GAAP adjustments		12,911		16,529		29,262		32,344
Non-GAAP taxes on income		$ 31,979		$ 27,044		$ 63,239		$ 53,727
GAAP net income		$ 65,572		$ 45,197		$ 123,513		$ 97,408
Valuation adjustment on acquired deferred revenue		–		2,038		–		3,966
Valuation adjustment on acquired deferred cost of cloud revenue		(13)		(26)		(28)		(51)
Amortization of acquired intangible assets		25,844		29,676		53,972		58,407
Valuation adjustment on acquired deferred commission		(52)		(55)		(105)		(108)
Share-based compensation (1)		43,495		31,251		92,107		62,957
Acquisition related expenses (2)		–		1,907		–		1,907
Amortization of discount on debt and loss from extinguishment of debt		1,264		10,813		3,493		14,937
Tax adjustments re non-GAAP adjustments		(12,911)		(16,529)		(29,262)		(32,344)
Non-GAAP net income		$ 123,199		$ 104,272		$ 243,690		$ 207,079
GAAP diluted earnings per share		$ 0.99		$ 0.68		$ 1.86		$ 1.46
Non-GAAP diluted earnings per share		$ 1.86		$ 1.57		$ 3.66		$ 3.11
Shares used in computing GAAP diluted earnings per share		66,274		66,512		66,563		66,618
Shares used in computing non-GAAP diluted earnings per share		66,274		66,512		66,563		66,618

NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)
U.S. dollars in thousands
(1)	Share-based Compensation
		Quarter ended				Year to date
		June 30,				June 30,
		2022		2021		2022		2021
	Cost of cloud revenue	$ 1,741		$ 1,676		$ 4,070		$ 3,170
	Cost of services revenue	2,519		1,646		5,486		4,081
	Cost of product revenue	134		126		266		251
	Research and development	7,886		4,111		16,401		8,168
	Sales and marketing	13,129		6,911		29,398		17,819
	General and administrative	18,086		16,781		36,486		29,468
		$ 43,495		$ 31,251		$ 92,107		$ 62,957
(2)	Acquisition related expenses
		Quarter ended				Year to date
		June 30,				June 30,
		2022		2021		2022		2021
	Research and development	–		–		–		–
	Sales and marketing	–		–		–		–
	General and administrative	–		1,907		–		1,907
		–		1,907		–		1,907

 

Contacts

Investors
Marty Cohen, +1 551 256 5354, ET, [email protected]
Omri Arens, +972 3 763-0127, CET, [email protected]

Media Contact
Chris Irwin-Dudek, +1 (551) 256-5140, [email protected]